Farside on Nostr: Here is a tricky thing. In a traditional monetary system where dollars are backed by ...

Here is a tricky thing. In a traditional monetary system where dollars are backed by some kind of value, then debasement indeed happens and a symptom of that is inflation.

But we are currently not in a system like that. We have a money /debt equivalence system (money IS debt).

If you "print" more debt and add it to the existing debt, it does not debase the existing debt. Link interest on a loan, it accumulates, but has no effect on the principle.

This is what hangs up the goldbugs for example. How can trillions of dollars be printed and yet we are not in a hyperinflation? They wonder.

Because printing debt does not debase the existing debt. It simply grows until the spell breaks, and confidence/perception collapses. When that happens, it triggers a sovereign default on all existing debt. In this system, the currency is wiped out and a new one is issued.

We are about to watch this happen in the Euro.

We have a situation globally where the people who support this system via their belief (everybody who transacts in fiat currency), are acting based on a mental paradigm related to a completely different system.

When it comes to my sheep, I took these debt instruments and traded them for real value that self replicates. I was looking for a way to get as much out of this system before the spell breaks.

For this reason, I will not sell a sheep or sheep products for fiat, as that would be self defeating. I will trade for other items that have intrinsic value, or exchange them for other forms of capital.

For example, I can build social capital within my community by sharing some of the dividends of my investment with others.